PPF: Is there a limit on depositing money in PPF? What happens if you deposit more than 12 times a year?

PPF Deposit Limit Rules: The most common confusion is about how many times you can deposit money into a PPF annually. Following the new 2019 rules, you can now deposit money into PPF as many times as you wish, with a total limit of up to ₹1.5 lakh. However, if you're still confused, read this news to clear your doubts.

How much can you invest in PPF in a year?
The biggest confusion that arises when opening a PPF account is how many times you can deposit money in a year. Some people believe that PPF deposits are only allowed 12 times, while others say that you can deposit as many times as you wish. However, it's crucial to understand the truth, as PPF is a long-term, safe investment that people choose for retirement and tax savings. First, let's understand the truth: before 2019, only 12 deposits were allowed in PPF. However, the rules changed in 2019, and now there's no limit on the number of deposits per financial year.

A look at the rules:
Today, you can deposit money as many times as you want—five, 12, 20, or 50 times a year. The total amount must not exceed ₹1.5 lakh. The old rules remained in effect for many years, which is why many people still cite the 12-transaction rule. But now it's important to break that myth and understand the new PPF rules.

When is the penalty levied?
It's mandatory to deposit at least ₹500 annually. Failure to do so will result in the account becoming inactive, and a ₹50 penalty and a minimum deposit of ₹500 must be made to reactivate it. PPF interest is paid on the minimum balance in the account from the 5th of every month until the end of the month. Therefore, try to deposit money between the 1st and 5th of every month. By following this simple rule, you can earn lakhs of rupees in extra interest over 15 years.

An example, and all the confusion will end.
Suppose Raj deposited different amounts in April, May, June, and July. Then, from August to December, he deposited Rs. 5,000 every month. He deposited Rs. 20,000 in January and the remaining amount in March. He deposited more than 12 times in a year, but the total amount was less than Rs. 1.5 lakh. Therefore, this is completely in accordance with the rules. Priya deposits Rs. 1,000 every month. At the end of the year, when she sees that she has deposited a total of Rs. 1.38 lakh, she deposits another Rs. 12,000 in the last month. This is also completely in accordance with the rules. Amit deposited small amounts 20 times a year, totaling ₹1.45 lakh. This means that despite the high number of transactions, this is 100% in accordance with the rules.

Why the Government Changed the Rules
The government observed that people wanted to deposit small amounts based on their income, sometimes monthly, sometimes weekly, and sometimes in case of sudden need. The 12-deposit limit was becoming a hindrance. Therefore, the rules were changed to make it easier for people to save and fully fund the PPF.

Returns and the Complete Lock-In Process
The lock-in period of PPF is 15 years. The money remains locked during this period, but partial withdrawals are available after the sixth year. If someone needs money in between, a loan can also be taken between the third and sixth years, at an interest rate 1% higher than the PPF interest rate. This is a good option for those who don't want to withdraw money but want to borrow a small amount to get by. The account can be extended after 15 years. Even if you don't deposit any more money, the deposit in the account will continue to earn interest.

Keep tax rules in mind, too.
PPF is one of the few schemes in India that falls under the EEE category—the deposit amount is tax-free, the interest is tax-free, and the maturity amount is also tax-free. Yes, up to ₹1.5 lakh is tax-deductible under Section 80C. Interest is added annually on March 31st, so deposits made before the 5th of March earn higher returns.

Depositing 12 times is just a myth.
From this information, it's clear that the "12-times-a-year" rule is now history. It's entirely up to you how often you deposit. Whether you deposit ₹50 every week or a full ₹1.5 lakh once a year, both methods are valid. Just make sure you deposit on the right date and don't exceed the limit. With proper planning, PPF can give you a safe and tax-free fund of lakhs of rupees in 15 years.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.